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Annual Report 2008Swiss Life (Luxembourg) S.A.

Annual Report 2008

Content - Management report for the financial year 2008

to the Annual General Meeting of 9 April 2009 - Comments on the financial year 2008......................................................................... 3 - Acknowledgements ..................................................................................................... 9 - Independent Auditor’s Report.................................................................................... 10

- Annual accounts

- Balance sheets as at 31 December 2008 and 2007 ................................................. 12 - Profit and loss accounts for the years

ended 31 December 2008 and 2007......................................................................... 14 - Notes to the annual accounts as at 31 December 2008 ........................................... 16

Swiss Life (Luxembourg) S.A. 25, route d'Arlon - L-8009 Strassen B.P. 2086 - L-1020 LuxembourgA limited company under Luxembourg law authorised by ministerial order on 2 May 1985 - Trade Register Luxembourg section B no. 22663 Annual report 2008 - Content /30

Annual Report 2008

Management report for the financial year 2008 to the Annual General Meeting of 9 April 2009 Comments on the financial year 2008 1. General considerations

At the end of 2007, the Swiss Life Group placed Luxembourg at the very core of its strategy in a bid to boost its international development. Swiss Life’s activities in the Grand Duchy of Luxembourg are now structured by business area and integrated into transnational business lines. The advantages of this strategy are already apparent: Employee benefit solutions for corporate clients In Luxembourg, Swiss Life’s total premium income from group insurance climbed 16% compared to 2007. It is gaining more ground on the Luxembourg market where the company is once again strengthening its position as leader. Swiss Life also received the HR Best Pension Solutions Award for the 6th consecutive year. The international ambitions of the transnational business line Corporate Solutions were already achieved in 2008, with Luxembourg turnover from companies located outside the Grand Duchy up 33% (mainly through solutions designed for expatriates). Looking forward, Swiss Life will branch out into new areas and strengthen its international position as a leading player in the global employee benefit market. While continuing to invest in preserving its leadership in the Luxembourg market, Corporate Solutions will increasingly carry out cross-border business with companies in previously unexplored markets and offer a range of pension fund solutions.

Private placement life insurance Life insurance designed for international high net worth individuals is also integrated into a cross-border business line, Private Placement Life Insurance. In 2008, the Luxembourg teams were strengthened and consolidated, as were partnerships with major private banks. The marketing strategy and operational structure were aligned with those of the business line and activities in Luxembourg were largely refocused on dedicated funds; as a result, turnover is up 76% compared with 2007. In 2008, the company opened a branch in Switzerland in order to manage insurance contracts of clients whose financial intermediary is based there. Private Placement Life Insurance in Luxembourg will mainly serve the French, Belgian and Luxembourg markets, without ruling out the possibility of expansion. Its unique platform enables the network to simultaneously distribute products from Luxembourg, Singapore and Liechtenstein, creating growth prospects for Swiss Life in Luxembourg thanks to the distribution of its Luxembourg products by sales teams based in Dubai, Liechtenstein, Luxembourg, Singapore and Switzerland. The business line intends to consolidate its supranational structure while exploring new opportunities.

Swiss Life (Luxembourg) S.A. 25, route d'Arlon - L-8009 Strassen B.P. 2086 - L-1020 LuxembourgA limited company under Luxembourg law authorised by ministerial order on 2 May 1985 - Trade Register Luxembourg section B no. 22663 Annual report 2008 - Management report for the financial year 2008 to the Annual General Meeting of 9 April 2009 /30

Annual Report 2008

Overall, Swiss Life (Luxembourg) S.A. achieved turnover growth of 58% in 2008 (487.752 million euros against 309.198 million euros in 2007). In spite of difficult market conditions, the company's technical provisions gained 13% compared with 2007 to reach 1 597.036 million euros at 31 December 2008. The company also closed the 2008 financial year in positive territory, with profits of 174 672 euros. This takes 100% of the losses on the company’s equity portfolio into consideration, in compliance with the prudential policy of the Commissariat aux Assurances. The assets for which the investment risk is borne by the company therefore resulted in losses (net of gains) in the amount of 5.677 million euros for the financial year under review (whereas 2007 posted gains (net of losses) in the amount of 2.817 million euros). Finally, the company did not acquire any own shares.

2. Insurance operations Turnover amounted to 487.752 million euros, which is an increase of 58% compared with 2007. The following charts illustrate movements in premium income over the last four financial years, as well as the breakdown of premiums by country where the insurance contracts are taken out.

Total premium income

305 332

534 869

309 198487 752

0

100 000

200 000

300 000

400 000

500 000

600 000

2005 2006 2007 2008

EUR

(1 0

00)


Annual Report 2008

Breakdown of premiums by country, 2008

157

60

16100

29

48

78

Luxembourg

Belgium

France

Italy

Spain

Other EEA countries

Countries outside the EEA

Movements in premium income between 2007 and 2008 are shown according to product type in the following charts and are discussed below.

Movements in premium income - Individual/group insurance

368 386

487 752

206 194

309 198

103 003 119 365

0

100 000

200 000

300 000

400 000

500 000

600 000

Individual insurance Group insurance Total

EUR

(100

0)

2007

2008

Movements in premium income - Product type

120 918

487 752

214 440

94 758

309 198

366 833

0

100 000

200 000

300 000

400 000

500 000

600 000

Products w ithguaranteed rates

Investment risk borneby policyholder

Total

EUR

(100

0)

2007

2008


Annual Report 2008

In 2008, premium income in respect of products with technical rates guaranteed by the insurer rose 28% compared with 2007. Both group insurance (+11%) and individual insurance (+104%) gained ground, with the latter benefiting from the boom in “Credit Life” business underwritten in the context of financing the purchase of vehicles and significantly reinsured as of 2008. A sharp increase was also observed in products for which the investment risk is borne by the policyholder (+71%) compared with 2007; this may be broken down as follows: - increase of 30% for group insurance due to new contracts and exceptional

premiums; - increase of 77% for individual insurance: dedicated funds jumped by 136%, while

products linked to collective internal funds and external funds shrank by 56% due to the refocusing of distribution activities on dedicated funds.

Total technical provisions

355 877 371 526 407 031 460 732

401 166

835 9291 006 924

1 136 305

-100 000

150 000

400 000

650 000

900 000

1 150 000

1 400 000

1 650 000

2005 2006 2007 2008

EUR

(1 0

00)

Products with guaranteed rates Investment risk borne by policyholder

At 31 December 2008, technical provisions of contracts with guaranteed rates amounted to 460.732 million euros, an increase of 13% compared with the previous financial year. Contracts in respect of which the investment risk is borne by the policyholder have also seen their technical provisions rise by 13% to reach 1 136.305 million euros. Therefore, the company’s overall technical provisions amounted to a total of 1.597 billion euros. Finally, benefits paid have grown by 18% (117.729 million euros against 100.112 million euros in 2007). There are no major post-balance sheet events to report that are likely to have an impact on the annual financial statements.


Annual Report 2008

3. Description and management of main risks Market risks, examined in more detail below, are analysed and followed up on a monthly basis:

- Interest rate risk is evaluated using ALM techniques. A comparison is thus made

of the fair values of assets and liabilities, which correspond to the current values - according to market rates - of the cash flows arising from the asset portfolios concerned and the technical liabilities thus covered; the duration of assets and liabilities and their gaps are calculated, plus a check is carried out to ensure that the fair value of assets exceeds that of liabilities, also during various stress tests.

- Equity risk corresponds to the risk of loss following an adverse trend in the financial markets; the portfolio’s exposure to equities is periodically tracked and UCIs are favoured in order to ensure a broad diversification.

- Currency risk results from the fact that some of the company’s commitments (13% of technical provisions for which the company bears the investment risk) are underwritten in currencies other than EUR, namely USD, CHF and GBP.

Credit risk is incorporated in the investment policy, which sets stringent criteria with regard to the minimum rating of bonds.

The company did not make use of derivatives during the financial year.

Management of these risks also falls directly within the scope of the policy in force within the Swiss Life Group. In particular, the asset allocation is subject to a periodic examination, one of the objectives of which is to ensure that the established risk limits are observed, notably by favouring high-quality securities.

Insurance risk mainly results from biometric and expense risks. - Mortality and morbidity risks are managed via the underwriting policy and the

tables used, while benefiting from the increase in life expectancy; results volatility and catastrophe risk are reduced by reinsurance.

- Longevity risk, in particular inherent in the life annuities business, results from the constant improvement in life expectancy beyond that forecast by the tariff rates; additional technical provisions are therefore established in line with recent prospective survival rates.

- Expense risk is also evaluated and an additional provision is thus formed to offset the failure of policy fees to cover costs relating to future portfolio management.

At operational risk level, a continuity plan is in place which allows administrative activities to continue in the event of the unavailability of or serious IT failures in the usual equipment.


Annual Report 2008

4. Profit for the year and proposed allocation For the year under review, the company realised a profit after tax of 174 672 euros. Taking into account the balance brought forward from 2007 of 1 000 000 euros, le the balance available to the Annual General Meeting is 1 174 672 euros. We propose to allocate this balance as follows: EUR - Allocation to legal reserve: 8 734 - Allocation to free reserve: 1 488 058 - Allocation to unavailable reserve for tax purposes (*): 0 - Unavailable reserve brought forward for tax purposes (**): (488 058) - Dividend to be paid to shareholders: 0 - Balance carried forward: 165 938 (*) in accordance with article 174 bis of the Income Tax Law allowing wealth tax to

be charged to its own base. (**) clawback of due past allocation to unavailable reserve for tax purposes, i.e.,

the allocation to unavailable reserve for the year 2001 (unavailable reserve retained for 5 tax years following the year in which the request to set up the reserve was made) and transfer to the free reserve.


Annual Report 2008

Acknowledgements We would like to thank our customers for the unwavering trust they continue to place in us. We would also like to extend our thanks to our various partners and to all employees of the Swiss Life Group. Finally, all our employees play a major role in our company’s success, for which we thank them. Their expertise, enthusiasm and loyalty constitute the essential cornerstones underpinning our company’s success. The Board of Directors Strassen, 19 March 2009


R.C.S. Luxembourg B 65 477 - TVA LU17564447

PricewaterhouseCoopers Société à responsabilité limitée Réviseur d'Entreprises 400, route d’Esch B.P. 1443 L-1014 Luxembourg Telephone +352 494848-1 Facsimile +352 494848-2900 www.pwc.com/lu [email protected]

Independent Auditor’s report To the Shareholders of Swiss Life (Luxembourg) S.A. Report on the annual accounts We have audited the accompanying annual accounts of Swiss Life (Luxembourg) S.A., which comprise the balance sheet as at 31 December 2008, the profit and loss account for the year then ended and a summary of significant accounting policies and other explanatory notes. Board of Directors’ responsibility for the annual accounts The Board of Directors is responsible for the preparation and fair presentation of these annual accounts in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the annual accounts. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of annual accounts that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these annual accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted by the “Institut des Réviseurs d’Entreprises”. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts. The procedures selected depend on the Auditor’s judgment, including the assessment of the risks of material misstatement of the annual accounts, whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation and fair presentation of the annual accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the annual accounts. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these annual accounts give a true and fair view of the financial position of Swiss Life (Luxembourg) S.A. as of 31 December 2008, and of the results of its operations for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the annual accounts. Report on other legal and regulatory requirements The management report, which is the responsibility of the Board of Directors, is in accordance with the annual accounts. PricewaterhouseCoopers S.à r.l. Luxembourg, 6 April 2009 Réviseur d’entreprises Represented by Mervyn R. Martins Only the French version of the present Annual Report has been reviewed by the Independent Auditor. Consequently, the Independent Auditor’s report refers to the French version of the report, other versions result from a conscientious translation made under the responsibility of the Board of Directors. In case of differences between the French version and the translation, the French version prevails.

Annual Report 2008

Balance sheets as at 31 December 2008 and 2007(expressed in euros)

AssetsNotes 2008 2007

Subscribed capital unpaid 10 6 000 000 7 436 806

Intangible assets 3(b), 4 103 914 75 353

Investments

Investments in affiliated undertakings and participating interests 3(d), 5 44 621 99 526Other financial investments 3(e), 6

Shares and other variable yieldtransferable securities and units in unit trusts 3(f) 19 538 727 12 002 142Debt securities and other fixed income transferable securities 3(g) 445 456 060 398 472 762Other loans 7 277 217 264 137Deposits with credit institutions 11 100 0

465 327 725 410 838 567

Investments for the benefit of life insurance policyholderswho bear the investment risk 3(h) 1 136 304 725 1 006 923 835

Reinsurer' share of technical provisions

Life insurance provision 15 11 772 642 475 382

Debtors

Debtors arising out of direct insurance operations 3(i), 8Policyholders 21 879 795 7 001 235Intermediaries 228 762 103 194

Debtors arising out of reinsurance operationsdue on claims 826 154 728 914deposits paid to reinsurers 0 0other debtors 15 7 717 011 1 360 079

Other debtors 2 226 830 1 652 77932 878 552 10 846 201

Other assets

Tangible assets and stocks 3(c) 754 745 479 015Cash at bank and in hand 33 711 106 19 305 256

34 465 851 19 784 271

Prepayments and accrued income

Accrued interest and rent 10 193 613 9 427 193Deferred acquisition costs 3(j), 9 5 735 219 6 177 507Other prepayments and accrued income 464 876 712 449

16 393 708 16 317 149

Total assets 1 703 247 117 1 472 697 564

The accompanying notes form an integral part of these financial statements.

Swiss Life (Luxembourg) S.A. 25, route d'Arlon - L-8009 Strassen B.P. 2086 - L-1020 LuxembourgA limited company under Luxembourg law authorised by ministerial order on 2 May 1985 - Trade Register Luxembourg section B no. 22663 Annual report 2008 - Balance sheets as at 31 December 2008 and 2007 /30

Annual Report 2008

Balance sheets as at 31 December 2008 and 2007(expressed in euros)

LiabilitiesNotes 2008 2007

Capital and reserves 10

Subscribed capital 23 000 000 15 000 000

Reserves

Legal reserve 11 792 143 618 228

Other reserves 10 378 190 7 919 041

Profits brought forward 1 000 000 154 752

Profit for the financial year 174 672 3 478 312

35 345 005 27 170 333

Subordinated liabilities

Subordinated loan 8 13 000 000 6 500 000

Technical provisions 3(k), 12

Provision for unearned premiums 872 832 702 335

Life insurance provision 443 002 477 386 942 014

Claims outstanding 11 958 153 10 653 873

Provision for bonuses and rebates 4 898 340 8 732 550

460 731 802 407 030 772

Technical provisions for life insurance policieswhere the investment risk is borne bythe policyholders 3(k), 12 1 136 304 725 1 006 923 835

Provisions for other risks and charges 3(l)

Provisions for taxation 3 679 619 3 340 454

Other provisions 13 88 000 300 000

3 767 619 3 640 454

Deposits received from reinsurers 15 11 772 642 475 381

Creditors 3(m), 8, 14

Creditors arising out of direct insurance operations 18 994 141 6 136 318

Creditors arising out of reinsurance operations

Payable reassigned premiums 15 19 928 481 10 086 174

Other creditors, including tax and 0

social security 2 364 330 4 400 154

41 286 952 20 622 646

Accruals and deferred income 3(n) 1 038 372 334 143

Total liabilities 1 703 247 117 1 472 697 564


Swiss Life (Luxembourg) S.A. 25, route d'Arlon - L-8009 Strassen B.P. 2086 - L-1020 LuxembourgA limited company under Luxembourg law authorised by ministerial order on 2 May 1985 - Trade Register Luxembourg section B no. 22663 Annual report 2008 - Balance sheets as at 31 December 2008 and 2007 /30

Annual Report 2008

Profit and loss accounts for the years ended 31 December 2008 and 2007(expressed in euros)

Notes 2008 2007

Technical account - Life insurance business 15

Earned premiums, net of reinsuranceGross premiums written 16 487 751 685 309 197 624Outward reinsurance premiums 15 -32 117 758 -9 537 823Change in the provision for unearned premiums,net of reinsurance -171 960 -36 538

455 461 967 299 623 263

Investment incomeIncome from other investments 21 884 181 19 575 796Gains on the realisation of investments 2 036 883 7 071 708

23 921 064 26 647 504

Unrealised gains on investments 3(h) 6 183 527 27 674 497

Other technical income, net of reinsurance 950 332 1 003 404

Claims incurred, net of reinsuranceClaims paid

Gross amount -117 929 194 -100 111 547Reinsurers' share 826 154 728 914

Changes in the provision for claimsGross amount -1 318 958 -1 844 300

-118 421 998 -101 226 933

Changes in other technical provisions, net of reinsuranceLife insurance provision

Gross amount -181 043 108 -206 979 778Reinsurers' share 15 11 297 260 -34 499

-169 745 848 -207 014 277

Bonuses and rebates, net of resinsurance -3 427 090 -7 084 072

Net operating expensesAcquisition costs 17, 15 -15 044 220 -11 228 852Change in deferred acquisition costs -443 837 1 842 556Administrative expenses 3(p) -6 846 951 -8 174 248Reinsurance commissions and profit participation 15 7 717 011 1 331 630

-14 617 997 -16 228 914

Investment chargesInvestment management charges, including interest -2 576 799 -2 462 622Value adjustments on investments -449 445 -158 340Losses on the realisation of investments -14 908 242 -3 284 632

-17 934 486 -5 905 594

Unrealised losses on investments 3(h) -162 111 788 -12 519 463

Other technical charges, net of reinsurance -185 783 -149 276

Allocated investment return transferred to the non-technical account 3(o) 186 652 -1 468 383

Balance on the technical account - Life insurance business 258 552 3 351 756

Swiss Life (Luxembourg) S.A. 25, route d'Arlon - L-8009 Strassen B.P. 2086 - L-1020 LuxembourgA limited company under Luxembourg law authorised by ministerial order on 2 May 1985 - Trade Register Luxembourg section B no. 22663 Annual report 2008 - Profit and loss accounts for the years ended 31 December 2008 and 2007 /30

Annual Report 2008

Notes 2008 2007

Non-technical account

Balance on the technical account - life insurance business 258 552 3 351 756

Allocated investment return transferred from the life insurance 3(o) -186 652 1 468 383technical account

Other charges, including value adjustments -40 000 -500 000

Other Income 500 000

Tax on profit or loss on ordinary activities -371 786 -88 940

Profit on ordinary activities after tax 160 114 4 231 199

Extraordinary charges 0 -638 775

Extraordinary loss 0 -638 775

Other taxes, not shown under the preceding items 14 558 -114 112

Profit for the financial year 174 672 3 478 312


Swiss Life (Luxembourg) S.A. 25, route d'Arlon - L-8009 Strassen B.P. 2086 - L-1020 LuxembourgA limited company under Luxembourg law authorised by ministerial order on 2 May 1985 - Trade Register Luxembourg section B no. 22663 Annual report 2008 - Profit and loss accounts for the years ended 31 December 2008 and 2007 /30

Notes to the annual accounts as at 31 December 2008

1. General Swiss Life (Luxembourg) S.A. ("the company") is an insurance company incorporated in the Grand Duchy of Luxembourg on 27 March 1985, as a limited liability company (société anonyme). The objects of the company are to engage in any insurance and reinsurance business in the "life" branch, both in the Grand Duchy of Luxembourg and abroad, on its own behalf and on behalf of third parties, as follows: 1. Insurance operations

- in case of death - in case of life, with or without reinsurance - combined - regarding complementary covers providing non-indemnity benefits in the event

of sickness or accident, in particular in the event of disability. 2. Capitalisation operations 3. Management of collective pension funds, and more generally, any financial, asset

and real estate transactions directly connected with the objects above. The company may also acquire any interests and shareholdings in any other companies or insurance companies which are liable to further the company's business, and more particularly by establishing special purpose companies, investments, mergers, subscribing for and purchasing shares, bonds and other securities, purchasing interests in companies and by any partnership or other agreements of any kind whatsoever.

2. Presentation of the financial statements These financial statements have been prepared in conformity with the law of 8 December 1994 on financial statements with respect to insurance and reinsurance undertakings, and with the significant accounting policies generally accepted within the insurance industry in the Grand Duchy of Luxembourg. The accounting policies and the valuation rules apart from those defined by the law or the Commissariat aux Assurances are determined and applied by the Board of Directors. The company is, in accordance with Luxembourg law, exempt from the requirement to prepare consolidated financial statements and a consolidated Management report for the year ended 31 December 2008. Therefore, in conformity with legal requirements, these accounts were presented on a non consolidated basis for approval by the shareholders at the Annual General Meeting.

Swiss Life (Luxembourg) S.A. 25, route d'Arlon - L-8009 Strassen B.P. 2086 - L-1020 LuxembourgA limited company under Luxembourg law authorised by ministerial order on 2 May 1985 - Trade Register Luxembourg section B no. 22663 Notes to the annual accounts as at 31 December 2008 /30

Notes to the annual accounts

3. Summary of significant accounting policies The significant accounting policies applied by the company are as follows:

(a) Translation of items expressed in foreign currencies The assets and liabilities, expressed in foreign currencies, are translated into euros (EUR) at the exchange rates prevailing at the balance sheet date. Transactions during the accounting period, expressed in foreign currencies, are translated into euros (EUR) at the exchange rates prevailing at the balance sheet date.

(b) Intangible assets The intangible assets are valued at historical acquisition cost. Intangible assets are amortised on a straight line basis at 33.33% p.a. on setup costs, 16.67% to 50% p.a. on software and 10% on goodwill.

(c) Land and buildings - Tangible fixed assets Land and buildings and tangible assets, are valued at historical acquisition cost. The acquisition cost includes expenses incidental to the purchase. Buildings and tangible assets with limited useful economic lives are amortised on a straight line basis at the following rates: Plant 10% - 25.0%Electrical equipment 20% - 33.3%Machinery 20% - 33.3%Office furniture 10% - 33.3%

(d) Shares in affiliated undertakings and participating interests

Affiliated undertakings are considered to be the undertakings between which the company or the parent company exercises a dominant influence either directly or indirectly. Participating interests refer to rights contained in the capital of other undertakings which, when creating a durable link with those undertakings, are intended to contribute to the company’s activities. Shares in affiliated undertakings and participating interests are valued at historical acquisition cost which includes expenses incidental to the purchase. If the impairment in value is of a permanent nature, the shares in affiliated undertakings and participating interests are valued at the lower value at the balance sheet date. These value adjustments should no longer continue when the reasons for which they were made cease to apply.



(e) Other financial investments Other financial investments are valued at historical acquisition cost which includes incidental purchase expenses. If the directors expect the impairment in value to be permanent in nature, the other financial investments are valued at the lower value at the balance sheet date. These value adjustments may not be carried when the reasons for which they were made cease to apply.

(f) Shares and other variable yield transferable securities and units in unit trusts Shares and other variable yield transferable securities and units in unit trusts are valued at the lower of historical acquisition cost and realisable value. The acquisition cost includes expenses incidental to the purchase. The value adjustments which correspond to the difference between the realisable value and the acquisition cost are maintained even if the reasons for which they were made cease to apply.

(g) Debt securities and other fixed income transferable securities Debt securities and other fixed income securities are valued at historical acquisition cost, or redemption value, taking into account the following elements: - a positive difference between the acquisition cost and redemption value is written

off in instalments over the duration of the holding of the security; - a negative difference between the acquisition cost and redemption value is

released to income in instalments over the period remaining to repayment. If the Directors expect the impairment in value to be permanent in nature, debt securities and other fixed income transferable securities are valued at the lower value at the balance sheet date. These value adjustments may not be carried when the reasons for which they were made cease to apply.

(h) Investments for the benefit of life insurance policyholders who bear the investment risk Investments for the benefit of life insurance policyholders who bear the investment risk are valued at the market value at the balance sheet date and any difference between this value and the acquisition cost is disclosed in the technical account for life insurance in the unrealised gains or losses on investments line items. The market value shall refer to that value quoted on a stock exchange or the value at which the investment could be sold, valued prudently and in good faith.

(i) Debtors Debtors are valued at the lower of their nominal and their probable realisable value. Value adjustments shall be made when recoverability is questionable, either in part or entirely. These value adjustments shall no longer be carried when the reasons for which they were made cease to apply.



(j) Deferred acquisition costs Deferred acquisition costs directly related to life insurance contracts, disclosed as an asset, are based on the calculation of the life insurance provision.

(k) Technical provisions Sufficient technical provisions are set up in order that the company can meet, as far as can be reasonably foreseen, any liabilities arising from insurance contracts. Provision for unearned premiums Written premiums include all the amounts received or receivable with respect to insurance contracts concluded prior to the end of the accounting period. That part of written premiums which is to be allocated to one or more subsequent financial years is deferred by way of the provision for unearned premiums, computed separately for each contract on a prorata basis. Life insurance provision The life insurance provision, which consists of the actuarial value of the company’s liabilities net of future premiums, is calculated separately for each contract. The technical basis and methods applied for computing the balance sheets’ life insurance provision are specified in the annual actuarial report communicated to the supervisory authority. Provision for claims outstanding The provision for claims outstanding corresponds to the total estimated cost (including claims settlement costs) for settling all claims arising from events which have occurred up to the end of the financial year. The provision for claims outstanding is computed separately for each claim known by the company. Claims occurred but not declared as at balance sheet date are assessed globally on a flat-rate basis. Provision for bonuses and rebates This provision consists of amounts intended for policyholders or contract beneficiaries to the extent that such amounts represent an allocation of surplus or profit arising on business, or a partial refund of premium made based on the performance of the contracts. Technical provisions for life insurance contracts where the investment risk is borne by the policyholders This item shall comprise technical provisions set up to cover liabilities relating to investments in the context of life insurance contracts whose value or return is determined by reference to an index or to investments for which the policyholder bears the risk.



(l) Provisions for other risks and charges Provisions for other risks and charges are intended to cover losses or debts whose nature is clearly defined but are, at the balance sheet date, either likely or certain to be incurred but amounts or timing are indeterminable. The liabilities for the employees' pension fund are included under the technical provisions item.

(m) Creditors

Creditors are included in liabilities at settlement value. If the amount payable is greater than the amount received, the difference is charged at the date when the debt is recognised. If the amount payable is lower than the amount received, the difference is released to income in instalments over the remaining period of the contract.

(n) Accruals and deferred income This item consists of both income receivable before the balance sheet date but relating to a subsequent financial year and charges that relate to the current financial year but payable in a subsequent financial year.

(o) Allocated investment return transferred to the non-technical account The allocated investment return transferred from the technical account to the non-technical account represents the income relating to assets being part of the company’s free assets.

(p) Administrative expenses Administrative expenses specifically consist of costs arising from premium collection, portfolio administration, handling of bonuses and rebates and inward and outward reinsurance. In particular they include staff costs and depreciation provisions in respect of office furniture and equipment in so far as these need not to be shown under acquisition costs, claims incurred or investment charges.

(q) Value adjustments Value adjustments are deducted directly from the related individual asset.



4. Intangible assets The movements in intangible assets incurred during the financial year are summarised as follows:

Formation expenses

Capital increase

costs Software Goodwill Total EUR EUR EUR EUR EUR Gross book value 01/01/2008 13 898 143 244 357 871 128 905 643 918 Additions during the year 0 0 89 241 0 89 241 Disposals during the year 0 0 0 0 0 Gross book value 31/12/2008 13 898 143 244 447 112 128 905 733 159 Accumulated depreciation 01/01/2008 -13 898 -143 244 -282 518 -128 905 -568 565 Depreciation during the year 0 0 -60 680 0 -60 680 Accumulated depreciation 31/12/2008 -13 898 -143 244 -343 198 -128 905 -629 245 Net book value 31/12/2008 0 0 103 914 0 103 914 Net book value 31/12/2007 0 0 75 353 0 75 353

5. Shares in affiliated undertakings and participating interests The movements during the financial year in respect of shares in affiliated undertakings and participating interests are as follows:

Participating interests EURGross book value 01/01/2008 99 526Additions during the year 0Disposals during the year 54 905Gross book value 31/12/2008 44 621Accumulated depreciation 31/12/2007 0Depreciation 0Accumulated depreciation 31/12/2008 0Net book value 31/12/2008 44 621Net book value 31/12/2007 99 526Actual value 31/12/2008 132 756



The current value of shares in affiliated undertakings and participating interests has been determined by the following methods: - Transferable securities which are admitted to official listing on a stock exchange or

dealt in on another regulated market are valued on the basis of the last available price.

- Transferable securities not admitted to official listing on a stock exchange or not dealt in on another regulated market and transferable securities admitted to official listing on a stock exchange or dealt in on another regulated market for which the last available price is not representative are valued on the basis of their reasonably foreseeable sales price determined with prudence and good faith by the Board of Directors.

Following the sale of the participating interest in SLGB Management during 2008, the undertakings in which the company holds twenty per cent or more of the capital are the following:

%

holding Book value 31/12/2008

Capital &reserve

31/12/2007

Result of financial year

as at 31/12/2007 0 EUR EUR EUREsofac Luxembourg S.A. 30% 44 621 442 521 17 9793, rue Nicolas Adames 0% 0 0 0L-1114 Luxembourg 0% 0 0 0Luxembourg 0% 0 0 0 0% 0 0 0Total 0% 44 621

6. Other financial investments The current value of the items "Shares and other variable yield transferable securities" and "Debt securities and other fixed income transferable securities" as at 31 December 2008, was 19 569 997 euros and 450 825 558 euros respectively. The current value of the investment portfolio has been determined by the following methods: - Transferable securities which are admitted to official listing on a stock exchange or

dealt in on another regulated market are valued on the basis of the last available price.

- Transferable securities not admitted to official listing on a stock exchange or not dealt in on another regulated market and transferable securities admitted to official listing on a stock exchange or dealt in on another regulated market for which the last available price is not representative are valued on the basis of their reasonably foreseeable sales price determined with prudence and good faith by the Board of Directors. The depreciation of the positive and negative differences between the acquisition cost and the redemption value (agio/disagio) in the financial year 2008 stands at 1 257 119 euros and 894 959 euros respectively.

The net balance for depreciation as at 31 December 2008, stands at 3 454 769 euros.



7. Other loans Other loans are secured by policies taken out by the borrower.

8. Amounts owed by or to affiliated undertakings or undertakings with which the company is linked by virtue of a participating interest The items may be broken down as follows:

Affiliated

undertakings

Undertakings linked by virtue of a participating

interest EUR EURDebtors Debtors arising of reinsurance operations 1 977 064 0Other debtors 1 640 626 0 0 0Creditors 0 0Creditors arising out of reinsurance operations 11 186 262 0Debenture loans: - of which subordinated loans 13 000 000 0Amounts owed to credit institutions 8 481 0Other creditors 1 095 847 14 000 Two subordinated loans, of 6.5 million euros each, have been contracted with Swiss Life Insurance Finance Ltd with maturities respectively on 30 June 2009 and on 2 June 2013. The company has concluded Service Level Agreements with several companies of the Group, including in Luxembourg.



9. Deferred acquisition costs The movements in deferred acquisition costs during the financial year can be summarised as follows: EURNet acquisition costs, opening balance 6 177 507Conversion differences (net) 1 549Net difference in additions/depreciation during the year -443 837Net acquisition costs, closing balance 5 735 219

10. Capital and reserves The movements during the financial year in respect of capital and reserves may be broken down as follows:

Subscribed

capital Legal

reserve Other

reserves

Profit brought forward

Profit for the year

Distributed dividends

EUR EUR EUR EUR EUR EUR As at 31/12/2007 15 000 000 618 228 7 919 041 154 752 3 478 312 800 000 Allocation of result 2007 173 915 2 459 149 845 248 -3 478 312

Movements during financial year 2008 8 000 000 174 672

As at 31/12/2008 23 000 000 792 143 10 378 190 1 000 000 174 672 On 29 July 2008 Swiss Life (Luxembourg) S.A., requested the payment of the unpaid capital, amounting to 7 436 806 euros, the subscribed capital being then entirely paid. At the Extraordinary General Meeting of 7 August 2008, the company’s subscribed capital was increased by 8 000 000 euros by issuing 8 000 new shares with no nominal value, of which 2 000 000 euros were paid up in cash. As at 31 December 2008, the subscribed capital amounting to 23 000 000 euros, is represented by 23 000 shares with no nominal value; the paid up capital is 17 000 000 euros.

11. Legal reserve

The company must allocate 5% of its net profit for each financial year in order to comply with Luxembourg company law requirements. This allocation ceases to be compulsory once the legal reserve balance reaches 10% of the issued share capital. The legal reserve is not available for distribution to shareholders, except upon the dissolution of the company.



12. Technical provisions

Provision for

unearned premiums

Lifeinsuranceprovision

Provisionfor claims

outstanding

Provisionfor

bonuses Technical

provisions* Total Closing balance 31/12/2007 702 335 386 942 014 10 653 873 8 732 550 1 006 923 835 1 413 954 607 Conversion Difference -1 463 167 181 -14 676 1 955 4 231 064 4 384 061 Opening balance 01/01/2008 700 872 387 109 195 10 639 197 8 734 505 1 011 154 899 1 418 338 668 Movements during financial year 2008 171 960 55 893 282 1 318 956 -3 836 165 125 149 826 178 697 859 Closing balance 31/12/2008 872 832 443 002 477 11 958 153 4 898 340 1 136 304 725 1 597 036 527 * relating to life insurance where investment risks are borne by the policyholder.

13. Other provisions It is mainly a provision for reorganisation set up in order to implement the integration of the group and individual operations into the new Corporate Solutions and Private Placement Life Insurance transnational divisions, for which an amount of 300 000 euros had been booked end of 2007.

14. Classification of loans according to duration With the exception of the subordinated loan having a duration of more than one year but less than five years, all loans have a duration of less than one year.

15. Results from the life insurance business The principal results of the life insurance business may be broken down as follows: 2008 Life insurance EURIndividual premiums 368 386 499Premiums under group contracts 119 365 186Periodic premiums 121 967 703Single premiums 365 783 982Premiums for non-bonus contracts 1 127 596Premiums for bonus contracts 119 790 614Premiums from contracts where the investment risks are borne by the policyholders 366 833 475Reinsurance balance 12 277 332



The “Credit Life” business represents a premium income of 25.153 million euros in 2008 (against 6.033 million euros in 2007) and is reinsured at a rate varying from 50% to 89.9% depending on the contract.

16. Geographical breakdown of written premiums Gross direct insurance premiums amounting to 487 751 685 euros, may be broken down into geographic zones according to where the contracts have been concluded: 2008 Life insurance EURContracts concluded in the Grand Duchy of Luxembourg 156 827 983Contracts concluded in other countries of the EEA 283 117 438Contracts concluded in other countries outside the EEA 47 806 264

17. Commissions Commissions paid to insurance intermediaries relating to direct insurance amount to 12 094 765 euros (2007: 7 707 637 euros), and are included in the acquisition costs item.

18. Personnel employed during the year The average number of persons employed during the financial year 2008 amounts to 70 and may be broken down in the following categories: Category Number of personsManagement 5Executives 33Salaried employees 31Waged employees 1 The personnel costs with respect to the financial year may be broken down as follows: EURWages and salaries 4 417 942Social securities costs 517 232- of which pensions 364 002



19. Remuneration granted to members of the Board of Directors and to Management Directors’ fees or other remuneration to members of the Board of Directors amount to 0 euro including employer charges. Remuneration granted to the company’s Management amount to 904 886 euros including employer charges.

20. Fees of the Independent Auditor The fees of the independent auditor for the years ending 31 December 2008 and 31 December 2007 are broken down as follows: 2008 2007 EUR EUR Legal audit charges 74 500 105 950 Other insurance services - - Tax advice services 12 889 - Other services 26 750 -

21. Off balance sheet commitments At 31 December 2008, the company has the following commitments: EUR Leasing of hardware 326 749 Leasing of vehicles 829 896 Leasing of office equipment 6 458 Building's lease agreement 1 700 304 Rent guarantee 7 050 - of which Group companies Moreover, Swiss Life (Luxembourg) S.A. committed itself, based on a trust agreement with Swiss Life (Liechtenstein) AG to hold, on behalf of Swiss Life (Liechtenstein) AG, a participating interest in an unquoted company. This participating interest is valued EUR 2 543 337 as at 31 December 2008.



22. Collective pension funds Assets EURInvestments Other financial investments

- Shares and other variable yields transferable securities and units in unit trusts 18 088 529

- Debt securities and other fixed income transferable securities 7 943 145 Other assets - Cash at bank and in hand 4 562 201 Prepayments and accrued income - Accrued interest and rent 70 117- Other prepayments and accrued income 30 663 992 Liabilities EURTechnical provisions Technical provisions for life insurance contracts where the investment risk is borne by the policyholders -30 663 992 -30 663 992

23. Tax status Swiss Life (Luxembourg) S.A. is subject to the tax legislation in force in the Grand Duchy of Luxembourg.

24. Information concerning consolidated companies Swiss Life (Luxembourg) S.A. is included in the consolidated financial statements prepared by Swiss Life Holding, a société anonyme under Swiss law, whose registered office is at CH-8022 Zurich, General-Guisan-Quai 40 (Switzerland), being the largest group of companies to which the company belongs as a subsidiary. The consolidated accounts are available from the head office of Swiss Life (Luxembourg) S.A.


Caution regarding forward-looking statements

This Annual Report contains forward-looking statements

about Swiss Life which involve certain risks and

uncertainties. The reader should be aware that such

statements represent projections which could differ

materially from actual outcomes and results. All forward

looking statements are based on the data available to

Swiss Life at the time this Annual Report was compiled.

This Annual Report is a translation of the audited French

document. The French text prevails.

Cover/Fourth cover page

Kosmo, Luxembourg

PhotographyGetty images

Swiss Life

25, route d’Arlon

L-8009 Strassen

B.P. 2086

L-1020 Luxembourg

T +352 42 39 59-1

F +352 26 43 40

www.swisslife.luSwiss Life (Luxembourg) S.A. - A limited company under Luxembourg law authorised by ministerial order on 2 May 1985 - Trade Register Luxembourg section B no. 22663

annual report 2008 swiss life (luxembourg) s.a. · 2019-02-15 · annual report 2008 overall, swiss...

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